Thursday, April 6, 2017

Trump: We Are Pretty Much Set on a Border Adjustment Tax

This is going to be particularly damaging to the retail sector (and, of course, consumers).

Here's President Trump during a new interview with The New York Times:

HABERMAN: On tax reform very quickly just because you said you might attach infrastructure to another piece of legislation.

TRUMP: Yes.

HABERMAN: Where are you — we’ve heard a bunch of sort of amorphous proposals — where are you in terms of the border adjustment tax?

TRUMP: Well, we’re very much — I don’t want to announce it yet — but we’re very much set, my team and others — uh, [Treasury Secretary] Steve Mnuchin, lot of other people — we’re very much set on the concept of the tax.

HABERMAN: You are.

TRUMP: We want to see what happens with health care first. Because health care will affect taxes. Because, if we get the health care that we want, we’re going to end up with great health care and we’re going to end up actually with a saving. And the saving will go toward a tax reduction.

The best interpretation of what Trump said is that a border-adjustment tax is coming. When he talks of a potential "tax reduction," he is not talking about an actual net reduction in taxes but a reduction in the size of the new cross-border tax.